AT&T Boosts Internet over the Phone

AT&T Corp. (NYSE: T), the largest telephone company in the United States, and Tellme Networks, Inc. jointly announced on Monday that they have formed a strategic alliance designed to stimulate new demand for Web content, commerce and communications delivered over the telephone.

Internet via Any Telephone

The partnership will enable the companies to develop new business and consumer applications based on Tellme’s Internet platform. Tellme’s service lets customers use spoken commands to access Internet content and services from any telephone.

AT&T will provide access to its telephone network and its toll-free services, extending Tellme’s reach to more users, the companies said. AT&T is taking a minority stake in Tellme for an investment of $60 million (US$).

The two companies are currently testing a national service that allows anyone in the United States to call a toll-free number and connect instantly with people, businesses and information to select restaurants, find movie times and reviews, check stock quotes and get sports scores, along with a variety of other operations.

The AT&T network automatically localizes a user’s request for information based on the call’s origination point. The Tellme service is slated for full availability this summer.

Dialing Up Competition

AT&T’s entry into the Internet-via-telephone market gives Tellme new power in its battle with voice recognition technology startups such as, and Talk2 Technology, Inc., which is backed by Hewlett-Packard Co. (NYSE: HWP).

Technology allowing Web access via ordinary telephones is expected to challenge the slow but steady expansion of Internet services designed for wireless telephones, which enable users to access abbreviated versions of popular Internet sites using a cell phone keypad and text screen.

Many industry observers expect voice-based Internet access to cut into the potential for WAP-based handheld wireless devices because voice commands can be used to access Web sites as they are currently posted on the Internet, eliminating the need to develop specialized versions.

AT&T Branches Out

AT&T is also backing efforts to increase the use of voice applications via PCs and the Internet. The company cut a deal last fall to provide networking services for five years to Net2Phone, a New Jersey-based company that is considered one of the leaders in developing Internet voice applications. AT&T stands to bring in $100 million in revenue from the agreement.

Net2Phone, which competes with the San Mateo, California-based and Louisville, Colorado-based Vstream, also has big-name backers in America Online and 1-800-Flowers.

The movement toward increasing voice communication on the Internet was spurred by poor customer service ratings and a high number of abandoned online shopping carts during the last holiday sales season. Many believe adding the personal touch of voice customer service may help close additional sales.

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